What changed in this filing

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Item 1A. Risk Factors

2025-09-23 compared with 2024-09-27 · 32 added, 33 removed, 271 unchanged (19% of the section changed)

13 unchanged sentences

In February 2022, armed conflict escalated between Russia and Ukraine.

Management is monitoring the conflict in Ukraine and any broader economic effects from the crisis.

Although Russia and Ukraine did not account for any of our net sales in FY 2025 or FY 2024, economic sanctions and export control measures by the U.S.

and European Union against Russia have resulted in increased volatility in the availability and prices of raw materials that are produced in that region.

There are further concerns regarding continued supply chain disruptions, consumer purchasing and consumption behavior, increases in global shipping expenses, greater volatility in foreign exchange and interest rates, increased energy costs, and other unforeseen business disruptions due to the current global geopolitical tensions, including relating to Ukraine.

Additionally, escalation by Russia in Ukraine or elsewhere in Europe could adversely affect our European operations.

We will continue to evaluate impacts of the conflict on our customers, suppliers, employees, and operations.

In October 2023, armed conflict escalated between Israel and Hamas.

Management is monitoring the conflict in Israel and Gaza and any broader economic effects from the crisis.

Israel accounts for a small portion of our global net sales, but we also source multiple raw materials that come from Israel.

While we do not anticipate this conflict will have a significant impact on our net sales, we have been communicating with our customers and suppliers who may be impacted by this conflict, and we are evaluating options for alternative ingredient sources and/or holding safety stock of impacted materials to limit the effect this conflict may have on our ability to obtain the ingredients sourced from this region.

These conflicts have created market uncertainty and volatility recently and this has negatively affected many industries, including the dietary supplement industry.

While we do not anticipate this conflict will have a significant impact on our net sales, we are continually communicating with our customers and suppliers who may be impacted by this conflict, and we are evaluating options for alternative ingredient sources and/or holding safety stock of impacted materials to limit the effect this conflict may have on our ability to obtain the ingredients sourced from this region.

Recently, these conflicts have resulted in market uncertainty and volatility, and this has negatively affected many industries, including the dietary supplement industry.

Global financial conditions remain subject to sudden and rapid destabilizations in response to economic shocks.

A slowdown in the financial markets or other economic conditions including but not limited to global supply chain issues, inflation, fuel and energy costs, lack of available credit, the state of the financial markets, interest rates and tax rates, may adversely affect our growth.

A slowdown in the financial markets or other economic conditions including but not limited to global supply chain issues, inflation, tariffs and trade disputes, fuel and energy costs, lack of available credit, the state of the financial markets, interest rates and tax rates, may adversely affect our growth.

Future economic shocks may be precipitated by a number of causes, including a continued rise in the price of oil and other commodities, the volatility of raw material prices, geopolitical instability, terrorism, pandemics, the devaluation and volatility of global stock markets and natural disasters.

18 unchanged sentences

Our business is subject to the effects of adverse publicity, which could negatively affect our sales and revenues.

Our business can be affected by adverse publicity or negative public perception about us, our competitors, our customers, our products, or our industry and competitors generally.

Our business can be affected by adverse publicity or negative public perception about us, our competitors, our customers, our products, or our industry generally.

Adverse publicity may include publicity about the nutritional supplements industry generally, the efficacy, safety and quality of nutritional supplements and other health care products or ingredients in general or our products or ingredients specifically, and regulatory investigations, regardless of whether these investigations involve us or the business practices or products of our competitors, or our customers.

16 unchanged sentences

Furthermore, there can be no assurance our contingency plans will prove to be adequate or successful if needed or our insurance will continue to be available at a reasonable cost or, if available, will be adequate to cover any losses that we may incur from an interruption in our manufacturing and distribution operations.

We recently opened a new warehouse and distribution facility in Carlsbad, California, and converted it into a dedicated high-volume powder blending and packaging facility while also providing additional raw material storage capacity.

In August of 2021, we opened a new warehouse and distribution facility in Carlsbad, California, and converted it into a dedicated high-volume powder blending and packaging facility while also providing additional raw material storage capacity.

There can be no assurance we will be successful in obtaining additional facility certifications that may be necessary to attract new customers or that we will obtain sufficient business through our on-going sales efforts to effectively utilize the facility and our investment therein.

We outsource our beta-alanine fulfillment and distribution activities as well as certain manufacturing activities.

We source our beta-alanine raw material as well as certain manufacturing activities from third parties.

The operation of the third-party service provider’s facilities is subject to the interruption risk and other risks similar to those described above for our facilities and there can be no assurance these interruptions or any other operational problem at such third party’s facilities would not have a material adverse effect on our business, financial condition and results of operations.

31 unchanged sentences

The loss of any of our major suppliers or of any supplier who provides us materials that are hard to obtain elsewhere at the same quality could adversely affect our business operations.

Although we believe we could establish alternate sources for most of our raw materials, any delay in locating and establishing relationships with other sources could result in shortages of products we manufacture from such raw materials, with a resulting loss of sales and customers.

In certain situations, we may be required to alter our products or with our customer’s consent to substitute different materials from alternative sources.

Although we believe we could establish alternative sources for most of our raw materials, any delay in locating and establishing relationships with other sources could result in shortages of products we manufacture from such raw materials, with a resulting loss of sales and customers.

In certain situations, we may be required to alter our products or with our customers' consent to substitute different materials from alternative sources.

A shortage of raw materials or an unexpected interruption of supply could also result in higher prices for those materials.

We have experienced increases in various raw material costs, transportation costs and the cost of petroleum-based raw materials and packaging supplies used in our business.

Increasing pricing pressures on raw materials and other products have continued throughout fiscal 2024 as a result of limited supplies of various ingredients, and related inflationary factors, including higher labor and transportation costs.

Increasing pricing pressures on raw materials and other products have continued throughout fiscal 2025 as a result of limited supplies of various ingredients, tariffs, and inflationary factors, including higher labor and transportation costs.

We expect these upward pressures to continue through fiscal 2026.

21 unchanged sentences

We currently derive significant revenues and income from sales of beta-alanine and from licensing our patents.

Our ability to maintain or grow our sales of beta-alanine and license revenue from our other patents is contingent on our ability to defend our patents, and commercialize the sale of beta-alanine under our instant release CarnoSyn ® patents and trademark, our sustained release SR CarnoSyn ® patents and trademark, and our new TriBsyn™ trademark, and any patents we may seek related to TriBysn™.

Our ability to maintain or grow our sales of beta-alanine and license revenue from our other patents is contingent on our ability to defend our patents, and commercialize the sale of beta-alanine under our instant release CarnoSyn ® patents and trademark, our sustained release SR CarnoSyn ® patents and trademark, and our TriBsyn™ trademark pending patent applications, and any additional patents we may seek related to TriBsyn™.

We own multiple patents and trademarks related to the use of beta-alanine in food and nutritional supplements.

A majority of our revenue and income from this segment is currently derived from activity related to licensing our patents and other intellectual property associated with instant release beta-alanine, sold under our trade name CarnoSyn®.

We have one patent for this version of CarnoSyn®, which expires in 2026.

Our patent and trademark licensing revenue decreased from $8.7 million in fiscal 2023 to $8.4 million in fiscal 2024 in part due to increased volume rebates partially offset by increased royalty income.

We have one patent for this version of CarnoSyn®, which expires in July 2026.

Our patent and trademark licensing revenue decreased from $8.4 million in fiscal 2024 to $8.1 million in fiscal 2025 due to decreased orders from existing customers partially offset by decreased volume rebates and increased royalty income.

There is no assurance we will be successful maintaining our historical CarnoSyn® instant release beta-alanine sales levels or growing future sales volumes with our remaining CarnoSyn® instant release patent estate.

1 unchanged sentence

We believe SR CarnoSyn® and TriBsyn™ are superior delivery systems for CarnoSyn® beta-alanine as they allow for increased daily dosing, improved muscle retention and bioavailability of carnosine.

Our patents related to SR CarnoSyn® extend through 2036, and we currently have patents pending for TriBsyn™ and believe the introduction of SR CarnoSyn® beta-alanine and TriBsyn™ are an important step in the further commercialization of our patent estate.

Our patents related to SR CarnoSyn® extend through 2036, and we currently have patents pending for TriBsyn™ and believe SR CarnoSyn® beta-alanine and the introduction of TriBsyn™ high-bioavailability beta-alanine are an important step in the further commercialization of our patent estate.

There can be no assurance we will be successful in getting the market to accept these new forms of beta-alanine or that we will be successful launching new products utilizing SR CarnoSyn® or TriBsyn™ beta-alanine.

17 unchanged sentences

The cost of complying with these various and potentially conflicting regulations can be substantial and could adversely affect our results of operations.

During the recent COVID-19 pandemic, our operations were subject to additional laws and regulations imposed by federal, state, and local governments primarily related to the ability of our employees to come to work and the safety measures that needed to be in place in order for our facilities to remain operational.

During the COVID-19 pandemic, our operations were subject to additional laws and regulations imposed by federal, state, and local governments primarily related to the ability of our employees to come to work and the safety measures that needed to be in place in order for our facilities to remain operational.

While we already had robust quality standards and procedures, we had to constantly monitor these new regulations and implement additional procedures where necessary, including at times temperature checks, additional cleaning procedures, allowing administrative personnel to work remotely, etc.

1 unchanged sentence

We cannot predict the nature of any future laws, regulations, interpretations, or applications, nor can we determine what effect additional governmental regulations, when and if adopted, would have on our business.

They could include new or revised requirements or restrictions related to the safe operation of our facilities due to the pandemic, or for the reformulation of certain products to meet new standards, the recall or discontinuance of certain products, additional compliance costs or record keeping requirements, expanded or different labeling, and additional scientific substantiation.

They could include new or revised requirements or restrictions related to the safe operation of our facilities, or for the reformulation of certain products to meet new standards, the recall or discontinuance of certain products, additional compliance costs or record keeping requirements, expanded or different labeling, and additional scientific substantiation.

Any or all of these requirements could have a material adverse effect on our operations.

Possible new tariffs on imported goods from China and elsewhere could adversely affect our business operations.

In recent years, the United States has implemented increased tariffs on a wide range of goods and materials imported from China and other governments.

In recent years, the United States has implemented increased tariffs on a wide range of goods and materials imported from China, Japan, India, Russia, Vietnam, South Korea, Australia, the European Union, Canada, Mexico and other governments.

These goods and materials may include products, applications, and ingredients we or our customers require for their products, including beta-alanine.

1 unchanged sentence

China and other governments responded to the implementation of tariffs by the United States by imposing their own tariffs on certain American products.

Continuing or increased tariffs could have a material adverse effect on our customer’s businesses, the availability of beta-alanine, and the cost of other raw materials we use in our customer’s products.

Continuing or increased tariffs could have a material adverse effect on our customers’ businesses, the availability of beta-alanine, and the cost of other raw materials we use in our customers’ products.

While it is difficult to predict whether or how existing and additional potential tariffs will be imposed, or how tariffs will impact our business, we believe the imposition of additional tariffs by the U.S.

66 unchanged sentences

Fluctuations in our operating results may adversely affect the share price of our common stock.

Our net sales decreased during fiscal 2024 as compared to fiscal 2023, and there can be no assurance our net sales will improve in the near term, or we will earn a profit in any given year.

We experienced a net loss in fiscal 2024 and may incur losses in the future.

Our net sales increased during fiscal 2025 as compared to fiscal 2024 but our loss from operations increased during the same period, and there can be no assurance our net sales will further improve in the near term, or we will earn a profit in any given year.

We experienced a net loss in fiscal 2025 and 2024 and may incur losses in the future.

Our operating results may fluctuate from year to year and/or from quarter to quarter due to various factors including differences related to the timing of revenues and expenses for financial reporting purposes and other factors described in this report.

At times, these fluctuations may be significant.

We currently anticipate we will experience a net loss in the first half of fiscal 2025, net income in the second half of fiscal 2025, and we will break-even or have a slight profit for the full year in fiscal 2025.

We currently anticipate we will experience a net loss in the first half of fiscal 2026, net income in the second half of fiscal 2026 and net income for the full year in fiscal 2026.

Fluctuations in our operating results may adversely affect the share price of our common stock.

24 unchanged sentences

Under the terms of our credit facility, there are limits on our ability to create, incur or assume additional indebtedness without the approval of our lender.

Our credit line terminates in May 2025 and there is no guarantee we will be able to extend or renew this credit line on favorable terms or at all.

Our credit line terminates in December 2026 and there is no guarantee we will be able to extend or renew this credit line on favorable terms or at all.

We may consider issuing additional debt or equity securities in the future to fund potential acquisitions or investments, to refinance existing debt, or for general corporate purposes.

4 unchanged sentences

There is no assurance we would be able to market such security issuances on favorable terms, or at all, in which case, if we did not have any alternate funds we might not be able to develop or enhance our products, execute our business plan, take advantage of future opportunities, respond to competitive pressures or meet unanticipated customer requirements.

Our inability to raise additional capital or to obtain additional financing if needed could negatively affect our ability to implement our business strategies and meet our goals.

If we were unable to raise additional capital or to obtain additional financing when we want to or need to, that could negatively affect our ability to implement our business strategies and meet our goals.

This, in turn, could adversely affect our financial condition and results of operations.

3 unchanged sentences

Our Information Systems risk management process evaluates and mitigates cybersecurity risks in alignment with our business objectives and operational needs.

We periodically engage third-party consultants and service providers to obtain an independent assessment regarding internal efforts to prevent threats on our Information Systems.

Continuous vigilance over safeguarding the Company’s Information Systems have resulted in our current approach and these assessments are shared with our Audit Committee.

We periodically engage third -party consultants and service providers to obtain an independent assessment regarding internal efforts to prevent threats to our Information Systems.

Continuous vigilance over safeguarding the Company’s Information Systems has resulted in our current approach and these assessments are shared with our Audit Committee.

To mitigate the occurrence of an incident as defined by the Company’s formal documentation, which classifies and defines the properties of potential threats, the Company has in place a host of defenses which include, but are not limited to, the use of gateway consoles in all our global locations, limited access to key Information Systems from in-office networks or VPN with multi-factor authentication by means of a third -party mobile identity management tool to limit access to authorized users.

3 unchanged sentences

Management is not aware of any material security breaches on its Information Systems and risks from cybersecurity threats have not previously materially affected us.

Because certain of our vendors have experienced cyberattacks in the past and the threat and development of cyberattacks is continuous, it is impossible to say with certainty whether the Company’s efforts will prevail in a coordinated attack on its Information Systems.

We currently do not expect the risks from cybersecurity threats are reasonably likely to materially affect us, including our business, strategy, results of operations or financial condition.

Certain of our vendors have experienced cyberattacks in the past and the threat and development of cyberattacks is continuous.

It is impossible to say with certainty whether the Company’s efforts will prevail in a coordinated attack on its Information Systems.

Currently we expect the risks from cybersecurity threats will continue, but are not reasonably likely to materially affect us mostly due to our profile and not because our defenses are impenetrable or the efforts of criminals will not become more sophisticated.

A cybersecurity attack on our systems could have a material negative impact upon our business, results of operations or financial condition.

For additional information about cybersecurity risks, see Item 1A.

4 unchanged sentences

The involvement of our Board in setting our business strategy is a key part of its oversight of risk management, its assessment of management’s appetite for risk, and its determination of what constitutes an appropriate level of risk for us.

Our senior management attends meetings of our Board and its committees on a quarterly basis, and as otherwise needed, and are available to address any questions or concerns raised by our Board on risk management and any other matters.

Our senior management attends meetings of our Board and its committees on a quarterly basis, and management communicates with the Board and its members regularly between Board meetings as otherwise needed and are available to address any questions or concerns raised by our Board on risk management and any other matters.

Role of Management

1 unchanged sentence

We believe it is important to work at all levels of the Company’s hierarchy to manage cybersecurity risks and threats.

Therefore, all users must use an online IT ticketing system, which is monitored around the clock, to report any incidences.

Therefore, all users must use an online IT ticketing system, which is monitored around the clock, to report any incidents.

Qualified individuals in IT determine what resources to allocate to each case and escalation of an incident, if deemed necessary.

The Systems Administrators and IT Director, who has more than 17 years of experience with the Company, communicates on a day-to-day basis with the Chief Financial Officer and President/Chief Operating Officer who would bring any material cybersecurity issues to the attention of the Company’s Chief Executive Officer and the Board.

The Systems Administrators and IT Director, who has more than 18 years of experience with the Company, communicates on a day-to-day basis with the Chief Financial Officer, and President/Chief Operating Officer who would bring any material cybersecurity issues to the attention of the Company’s Chief Executive Officer, the Audit Committee, and the Board.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors